More from Epic v. Google: everything we learned in Fortnite court

Full disclosure: my dad worked for Danger back in the day, and I used Sidekicks to type all my college notes and email them to myself.

1.) Web top up yes/no by region

2.) Promotional $ amount

3.) Exclusivity

Under exclusivity, there were two sticking points:

a.) ability to go APK in addition to Play

b.) ability to partner with Epic, Signtel

Riot’s CFO says nothing about the Google deal kept it from shipping an APK or putting the game on other stores. So why didn’t Riot ship an APK or put the game on Epic?

At the end of a long deposition, Sottosanti is no longer being categorical that there was no arrangement — we’re actually leaning slightly the opposite way. He doesn’t know for sure, and he says there was indeed a perception that Google wouldn’t want to do the deal if Riot bypassed the Play Store, even if he was not aware of any formal business agreement or informal understanding not to do so.

The “complexity” of most items is listed as “low” “very low” or “none,” with the exception of mobile payments, which is listed as “Medium (new capability).”

“All of the capabilities built in the process of preparing self-publishing for LR are reusable and can be then applied (after proper skinning) to other mobile games released by Riot,” the page ends.

Riot’s CFO dismissed it as an “initial educational document from technical to business people” about “what it would take” to make such a thing happen.

Epic is also pointing out that Riot’s typical strategy of attempting to distribute a game as broadly as possible and prioritize its own payment system (where it pays “generally between 2 and 5 percent, depending on the partner” on PC) doesn’t gel with the idea it would only ship the Android version of its game on the Google Play Store.

In fact, a 2018 Riot mobile strategy document has a line reading, “Steps can be taken to drive players into relatively low fee channels, preserving margin.” Yet Riot doesn’t allow players to sideload its APK on Android, where it could do just that.

I expect Epic will come back to some of these other bullet points in just a moment. Update: Yep, sure enough, Epic just brought them up moments after I pressed publish.

It’s not yet clear — but in sworn testimony for the Epic v. Google trial recorded just weeks ago on October 27th, 2023, that we heard live in court, Riot Games CFO said, “We’re working toward making them available on console platforms such as Xbox and Sony PlayStation.”

And if there were, he would have been aware of it as CFO, he testified.

He told me I got the exclamation points right in this story, which made me LOL. Later, I saw him laughing at one of our Verge bingo cards, asking a colleague if anyone’s said “metaverse” yet. I don’t think they have?

Oh and — we’ve tentatively got a date for an interview with Tim, though it won’t happen till after the jury verdict. He says he doesn’t want to interrupt (or was it interfere?) with the court process.

That $90M+ included:

$12M+ in pre-registration support on the store

$20M+ in merchandising launch support

$10M+ in post-launch promotion

$5M for a gift card retail program

$15M in co-marketing dollars (pre-reg and launch)

$10M in a Google Ads reimbursement program, $1 for every $3 spent up to $30 million dollars

$3M for a YouTube community development program

$20M+ in Google Cloud credits with “(2% of game rev on play as credits)”

“Dedicated technical, launch, growth, marketing, and BD Google staff for Riot Games”

“Dedicated quarterly code review, growth, optimization, and UI/UX workshops”

In exchange, Riot had to commit to sim-ship and content parity (with an exception for telcos) — but there was no requirement to stay exclusive to Google Play, we’re seeing. Google’s lawyer is walking Riot’s CFO through contract after contract, addendum after addendum, and none of them mention exclusivity or a Riot store.

So if Google stopped Riot from launching a store, it would have been through a private understanding — and Riot’s CFO says there wasn’t one.

He does say he believes it was Riot’s “perception” that Google believed Riot would sideload its games, bypassing Google’s store, if Google didn’t come through with the promised credits, though.

Here’s another, though. (Riot used underline instead of bold, but I don’t have that option at this moment):

Among the other platforms Riot considered, according to the document: Singtel and Epic Games.

On a page titled “Maximizing margins” that considered the pros and cons of going with Epic and Singtel lives this phrase:

“Cons: frustrating Google.”

The document shows that Riot was aware it could technically be on more stores in addition to Google Play, but I saw yet another bullet point that suggested it could be detrimental to the Google relationship, too.

Apparently this came up in a meeting where all of Google Play’s leadership was present:

Riot’s CFO now says he doesn’t think sideloading was explicitly mentioned in that meeting, though.

Google also wrote internally that it didn’t want Riot to do an app store.

He says Riot began discussions to launch games on Google Play before it had ported any games to mobile. It wound up signing an $18M deal with Google, which, Epic has tried to suggest, blocked Riot from launching its own mobile app distribution platform.

He says his understanding is Riot pays Apple the standard 30 percent service fee.

Lawyers just showed that ABK also considered a different deal with a redacted company. The business presentation included this note:

“Note: these deals are mutually exclusive and ABK will only enter into the one we determine as the best option.” Zerza confirms ABK choose Google over the other company, and (Google’s? Epic’s?) lawyer is driving home that ABK did so because the terms of the deal were simply better for ABK.

One of those terms that I managed to nab before it flashed off-screen:

We briefly saw the entire term sheet, but it was shown too small for us to read.

However, there’s apparently a document that implies the January 2020 deal did derail the Project Boston plan to do so, at least: “It led us to make the decision to pivot the plans for Boston,” read a lawyer, off a document I didn’t manage to see myself.

Here is another bullet about its proposed app store I missed getting into earlier posts:

ABK had an “estimated steady state goal of 10-12%” for its store, rather than the 30 percent fee it pays Google, according to the Boston presentation. Zerza said he couldn’t confirm the number.

In 2021, the plan was to reach “ABK solution at scale,” with 45–70 employees working on the project.

ABK’s CFO says that sounds very low. “This is not consistent with what I think it would take to develop a store like this,” he says, saying other internal efforts have hundreds of people.

The first version would have exclusively had King games like the mega-popular Candy Crush, but could stretch to Activision and Blizzard games later.

Details:

“Goals”:

Here’s the part where ABK suggests it could stretch to Blizzard games:

The MVP would have had 15 people working on it within the company, according to the slide we’re seeing.

Overall, the app would be:

I’m copying down the details about those paths best I can:

“At the time, we were talking to Google about an enterprise-wide deal which we obviously signed with Google in early 2020,” says the company’s CFO.

“At the same time we were also looking at our own mobile store,” he says. ABK wants you to think it genuinely pursued these ideas in parallel, but he hasn’t yet told us when ABK stopped pursuing the store.

Correction: I typo’d: the Google deal was early 2020, not early 2022.

“Project Boston” shows two parallel “paths” for ABK through the mobile app landscape, only one of which would be chosen in the end.

ABK wanted either a mobile app store or, alternatively, a $100M+ deal with Google. We know which one it got.

“Path 1: Enterprise negotiation” read: “capture stronger economics for ABK across mobile, YouTube, advertising, media spend, and cloud” and “$100M+ per year value creation for ABK and growth in overall book of business between ABK and Google”

“Path 2: Build own mobile store” includes this incredibly important bit, which ABK bolded for emphasis: “Should we secure real savings with Google, we would deprioritize path 2.”

“We have already announced CoD and Diablo mobile, more to come,” he teased.

In a 2022 video deposition, he told the court there were many reasons to explore the idea:

It would have had an interoperable account system, and the idea was to build the storefront first, then add marketing and promotions later on, according to the emails.

But in the 2022 deposition we’re hearing now, Zerza claims they were “very early exploratory discussions.”

“Obviously we never pursued it because it wasn’t financially attractive for us,” he says.

Lawyers questioning him are asking questions designed to see how serious ABK really was, and whether it lied to partners about its plans. Whether Google and Epic believed Activision Blizzard is relevant to this case.

The goal: “one single mobile games store focused on distribution of mobile games (“STEAM of Mobile” concept), including a single payment system.”

We’re seeing their emails in court right now:

Now, we’re hearing they wanted to build a mobile game store together, too.

We’ve now moved on to a September 22nd, 2022, video deposition with Activision Blizzard CFO Armin Zerza.

Epic moved on to attacking some of Tucker’s earlier points about competing with Apple, suggesting that whether Apple has a better product that indeed competes with Google’s products doesn’t tell us anything about whether Apple “constrains the Play Store as a competitor.”

“Things which are cumbersome, burdensome, not easy ways of delivering digital content,” she replies.

“Can you name a couple for us?“

She suggests that physically going to GameStop to buy a Nintendo Switch cartridge, which technically contains digital content, might be one.

“Is there anything online that is not in the relevant product market as you define it? Anything at all?”

A long pause. “So....”

“I think because I’m including the ability to self distribute...”

She lands on Disney Plus.

“There’s many ways I can get that content to you... that would include subscribing on my PC through a website [...] a smart TV would be another way ... I’d include all those ways because we’re allowing for the possibility of self distribution,” she says.

The judge leaves it at that for now. We’ve just moved on from market definition to other parts of Tucker’s report, but not before Epic tried its best to make Tucker look like she’s in fantasyland, with questions like, “In your view there are not even transactions between the smartphone OEMs and Google, correct?”

In a vacuum, that sounds pretty similar to Tucker’s definition of “facilitation of digital content transactions” — except for Google, it’s even better! Because it’s not limited to mobile, Tucker can point out that Android also competes with other gaming platforms like PlayStation, Xbox, and Nintendo, all of which have rigid 30 percent fees.

She initially says no, it’s about “an instance where a platform can add value.” But he probes further, asking if they would be such a platform in the online world. She waffles slightly, saying they need to have the ability to self-distribute.

The judge asks one more time: “Would you include browsers in the relevant product market?”

She says yes.

Tucker chose a market definition that gave the judge a double-take: “the facilitation of digital content transactions.”

Now, Epic will try to poke holes in it.

So far, Bornstein seems to be implying that Tucker’s definition is not a product — he suggests neither Google nor Apple ever refer to their products this way — but he’s early on in his line of questioning so I guess we’ll see!